Tariffying Auctions
A strategy to convert quotas to tariffs is to auction the quota rights and use the realized auction prices as guides to setting tariffs. In the 1980s, New Zealand employed auctions to allocate quota licenses. We analyze the relationship between tariff-equivalents and auction prices for auctions with resale. Using panel data from New Zealand's quota license auctions, we estimate the expected value of the tariff equivalent. We exploit data from the secondary market prices to test the model's predictions. The predictions fail, suggesting either that auction prices may understate or that aftermarket prices overstate the true tariff equivalent.
Year of publication: |
1999
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Authors: | McAfee, R. Preston ; Takacs, Wendy ; Vincent, Daniel R. |
Published in: |
RAND Journal of Economics. - The RAND Corporation, ISSN 0741-6261. - Vol. 30.1999, 1, p. 158-179
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Publisher: |
The RAND Corporation |
Saved in:
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